GLOBAL MARKETS-Euro scales heights, stocks lose grip on gains

By Herbert Lash NEW YORK, Dec 10 (Reuters) - Global equity markets tradedslightly lower on Tuesday while the dollar and U.S. Treasuryyields eased on a growing view that the Federal Reserve willneed additional positive data before it decides to scale backits economic stimulus. The euro hit a six-week high against the dollar as tradersreconsidered whether the Fed would trim its monthly purchases of$85 billion in bonds at its two-day meeting of policy-makersnext week. Even if the Fed were to signal a pullback in bond purchases,policymakers will likely opt for a small one to prevent a bondmarket sell-off, which would send long-term interest rateshigher and hurt the U.S. housing market. "We might see a gradual tapering. The Fed won't let rates gomuch higher," said Larry Milstein, head of government and agencytrading at R.W. Pressprich & Co. in New York. At the same time, increased speculation that a banking unionwith the power to close failing banks will be created in theeuro zone before the end of 2014 lifted the euro. European Union finance ministers meeting in Brussels arelikely to take a step toward creating a banking union onTuesday, but leave nagging legal details to another time,perhaps next week. A banking union is widely viewed as crucial to shore up theeuro zone against future debt and financial crises. "There's some expectation that a deal may be reached beforeyear-end, and that is supportive of the euro," said SireenHarajli, currency strategist at Mizuho Bank Ltd. in New York. The euro gained for a sixth straight day versus thegreenback and was within sight of this year's high of $1.3832.It last traded down 0.25 percent 1.3772. The euro's rise caused the dollar index to extendlosses into a second straight day. It fell to six-week lows,dragged down by lower U.S. Treasury yields, asinvestors mostly downplay the prospect of a reduction in theFed's asset purchases this month. The dollar index was down 0.21 percent at 79.965 The 10-year Treasury note was 12/32 higher in price to yield 2.8134 percent. European shares slipped, weighed down by major Swiss stocksas a rally in the Swiss franc raised fresh concern aboutthe country's exports. The pan-European FTSEurofirst 300 index closed downby 0.56 percent at a provisional 1,265.365. The Dow Jones industrial average fell 44.39 points,or 0.28 percent, at 15,981.14. The Standard & Poor's 500 Index was down 4.92 points, or 0.27 percent, at 1,803.45. TheNasdaq Composite Index was down 7.18 points, or 0.18percent, at 4,061.57. Brent crude for January was down 59 cents at $108.80a barrel. Brent dropped 2 percent on Monday, its biggest loss infive weeks. But U.S. crude oil was higher on news of progresstoward the opening of a major pipeline that will transport oilfrom the U.S. Midwest to the Gulf, helping drain surplus crudeat the pricing point for the futures contract. U.S. light crude futures for January were up 71 cents at$98.05 a barrel.